When we look at a company's balance sheet over two periods, we can see if our company's cash balance increased or decreased. However, the balance sheet doesn't provide all of the information we need to know why our cash changed. The income statement reports revenues and expenses and provides some more clues to why cash changes. However, the income statement does not tell us everything we need to know about our company's change in cash. We'd like to have more information about how a firm generates its cash and its ability to pay its bills.

As a result, company's are required to report a fourth statement: the cash flow statement. Under International Accounting Standard (IAS) 7, cash flow statements are required to make sense of changes in cash and cash equivalents.The U.S. FASB Statement No. 95 (FAS 95) mandates that firms provide a cash flow statement as well; however, it gives each firm the latitude to determine what assets are to be classified as cash equivalents. Both of these standards requrie that companies report cash flows provided by (or used in) three categories of activities: operating activities, investing activities and financing activities. Cash flows from these three activities are netted in order to get the net change in cash over the period.

There are two methods that can be used to build a cash flow statement. The direct method is easier to understand, as it simply lists cash receipts and cash payments for the year in each category. The indirect method (or reconciliation method) looks to reconciles net income with net cash provided by operations by making adjustments for deferrals, accruals and other items that affect net income but not cash.

The Indirect Method

With the indirect method, we start with a firm's net income figure from the income statement and adjust this figure for (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operatin cash receipts and payments and (b) all items included in net income that do not affect operating cash receipts and payments. In this way we reconcile the income statement with the enterprises cash flow from operations. We can then use the direct method for investing and financing activities.

FAS 95 requires that companies that use the direct method provide a supplementary statement similar to the indirect method cash flow statement; as a result, the indirect method is most commonly used.

Items that are typically added back to net income to get cash flow from operations include:
- Depreciation (loss of tangible assets' value over time)
- Deferred tax
- Amortization (loss of intangible assets' value over time)
- Any gains or losses associated with the sale of non-current assets, dividends received, and revenue from investing activities (we exclude these from the operating section and include them in the investing section of the cash flow statement)

The Direct Method

Operating activities: A business's ordinary operations typically include buying and selling goods and services to customers, and this section of the statement of cash flows shows the cash provided or used in these activities. Cash from operating activities is a business's most important source of cash. Continually negative cash from operating activities can lead to bankruptcy.

Cash inflows from operating activities are:
- Cash receipts from sales of goods or services, including from lessees, lincensees and the like
- Cash receipts from interest and dividends received
- All other cash receipts that do not stem from investing or financing activities (such as lawsuits, insurance claims and refunds)

Cash outflows from operating activities are:
- Cash payments for goods, materials, and inventory as well as accounts payable and notes payable for the same
- Cash payments to other suppliers and employees for goods or services
- Cash payments for taxes
- Cash payments for interest
- All other cash payments that do not stem from investing or financing activities (such as settling a lawsuit, donating to a charity or cash refunds)

Investing activities: Investing activities include the purchase of productive assets that a company will use in the production of goods and services. By extension, the disposal of these assets is considered an investing activity. Other assets such as making loans to other businesses or buying a stake in another company are also included as an investing activity. Typically net cash from investing activities should be negative - we want to see that the company is continuosly investing in long-term assets.

Cash inflows from investing activities are:
- Receipts from collections or sales of loans made by the enterprise and of other entities' debt instruments that were purchased by the enterprise (does not include those classified as cash equivalents)
- Receipts from sales of equity instruments of other entitites and from the returns of investments in those instruments
- Receipts from sales of property, plant, and equipment and other productive assts.

Cash outflows for investing activities are:
- Disbursements for loans made by the enterprise and payments to acquire debt instruments of other entities
- Payments to acquire equity instruments of other entities
- Payments to acquire property, plant and equipment and other productive assets

Financing activities: Financing activities of the company are those that affect the right hand side of the balance sheet. That is, a company must raise money to finance its investing and operating activities. A firm acquires resources by issuing equity or borrowing long-term debt. Over time, it may repurchase its own stock, pay dividends, or pay back long-term debt.

Cash inflows from financing activities are:
- Proceeds from issuing equity (issuing new shares)
- Proceeds from borrowing from a line of credit (LOC), bank loan, mortgage, notes, bonds or other short- or long-term borrowing

Smith Resort: Completing a Cash Flow Worksheet.
Please see the attachment for full details. The Problem Data can be found on the 3rd tab. The Cash Flow Worksheet is on the 2nd tab.
To complete a Cash Flow Statement you must have comparative Balance sheets, the Income Statement, and some additional information to assist in

Discussion Questions
1. Identify the three sections of the statement of cash flows. What sign (positive or negative) for each section would you expect for a financially strong firm? Expand on response
2. Define the statement of cash flows. What is its purpose? Expand on response
3. Why is the net cash flow from operating

As the name implies, non-cash financing activities involve financial transactions for purchase that do not involve cash. An example of a non-cash financing activity would be if you own a business and need to purchase new furniture and you make that purchase with a company credit card. Other examples of non-cash purchasing woul

The cash flow statement is an important, and often overlooked, financial statement. However, it can provide important data for use by internal organization management. By analyzing the balance sheet and income statement, the accountant can then prepare the statement and share the results with both internal and external users.

The company's complete annual report, including the notes to the financial statements, can be accessed at the book's companion website, www.wiley.com/college/kieso.
Click on Intermediate Accounting 15th Edition Visit Companion Site, scroll To Student Companion, then Browse by Resource, then click Annual Report, and then P&G 201

Accountants can use data flow diagrams (DFDs) to depict the physical flows of data through an AIS (like document flowcharts), or the logical flow of data through an AIS (like system flowcharts). Like document or system flowcharts, their main objective is to document data flows in an orderly, graphic, and easily-understood format

I need help understanding cash flow analysis. I do not understand how to assess the financial position Apple and compare it to one Microsoft. The emphasis is on cash flow for this analysis.
1.Compute the return on assets, profit margin and asset utilization rate for Apple and Microsoft.
2.Assess your Apple's competitive fina

Presented below are the comparative balance sheets for Gordon Company at December 31, 2013 and 2012.
Please see attachment for table
Additional Information:
1. Land was sold for $28,000 cash. Land was also obtained through issuance of common stock (see item 2). These are the only two transactions impacting land.
2. Land

Opus, Incorporated, owns 90 percent of Bloom Company. On December 31,2012, Opus acquires half of Bloom's $500,000 outstanding bonds. These bonds had been sold on the open market on January 1, 2010, at a 12 percent effective rate. The bonds pay a cash interest rate of 10 percent every December 31 and are scheduled to come due on

On January 1, 2013, Anywhere Tech Company exchanged $840,000 for 40 percent of the outstanding voting stock of Cloud Computing. Especially attractive to Anywhere Tech was a research project underway at Cloud Computing that would enhance both the speed and quantity of client accessible data. Although not recorded in Cloud Computi

Needing help with three problems, three tabs on attachment.
Classification of Cash Flow Transactions
P 1 Analyze each transaction listed in the table that follows and place X's in the appropriate columns to indicate the transaction's classification and its effect on cash flows using the indirect method.
Statement o

What is the basic format of the four basic financial statements: income statement, balance sheet, statement of cash flows and the statement of retained earnings? Explain the accounting equation with a table showing five accounts that belong to each part of the equation.

11. Which types of business transactions would result in cash from operating activities? Give three examples of transactions that would be classified as cash flows from operating activities..
12. Which types of business transactions would result in cash flows from investing activities? Give three examples of transactions that w

Complete the following exercise. Fill in the Excel spreadsheet provided via the link below to provide your answers to parts a, and b. Then paste the Excel data into a Word document on which you can also write the answer to part c.
cash_flows.xlsx
Label each exercise or problem clearly. Use APA formatting and citation if n

1. Which statement is true about the cash flow statement?
A. the operations section (using the direct method) starts with net income
B. an increase in accounts receivable adds back cash using the indirect method
C. the financing section is the same under either the direct or indirect method
D. None of the above is a true

E23-3 Preparation of Operating Activities Section - Indirect Method, Periodic Inventory
The income statement of Rodriquez Company is shown below.
RODRIQUEZ COMPANY
Income Statement
For The Year Ended December 31, 2012
Sales $6,900,000
Cost of goods sold
Beginning inventory

The primary goal of managerial accounting is to provide information to:
a. creditors
b. management
c. investors
d. external auditors
On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be
a. added to dividends declared in converting the dividends decl

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. If needed, use the minus sign to indicate cash outflows, negative amounts, net loss, or a decrease in cash.
The comparative balance sheet of Mills Engine Co. at December 31, 2013 and 2012, is as follows:
De

See attached balance sheet.
The SCQ Corporation manufactures specialty medical tools ranging from $10,000 to $15,000 per unit. The tools are used in hospitals, clinics, and the home hospitality market. SCQ Corporation has contracted with YOUCPA to assist in creating its cash flow statement. In the past, its income statement a

See the attachment.
(a) Calculate the change that occurred in cash during the month. You may assume that the change in each balance sheet amount is due to a single event (for example, the change in the amount of production equipment is not the result of both a purchase and sale of equipment). (Hints: What is the purpose of th

Please help make notes on what happened to Pearson in 2009 from looking at their cash flow statement and income statement. Only 1 slide of A4 will do. Please can you make just short notes for me? Explaining if anything happened in 2009 from looking at their figures. Here is the link to their financial information:
http://www.

Q1. What amount will Jensen report in its 2010 Statement of Cash flows as cash collected from Customers?
Q2. Determine the following amounts:
a. Purchase account
b. Cash paid to vendors of inventory
Q3. What amount will Jensen report as cash paid for income taxes?
Q4. What amount will Jensen reportas cash paid for Se,

Is there a difference between direct and indirect methods to make a statement of cash flows? Discuss and note two or three specific differences. In addition, clearly
- Distinguish between cash flows from operating activities and cash flows from investing activities.
- Compare the statement of cash flows with income statement

To open a new store, Ross Tire Company plans to invest $640,000 in equipment expected to have a four-year useful life and no salvage value. Ross expects the new store to generate annual cash revenues of $840,000 and to incur annual cash operating expenses of $520,000. Ross' average income tax rate is 30 percent. The company uses